Tag Archives: eSolar

Google quietly expanding into energy

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Over the past year, Google has expanded its influence in the electricity sector through an accelerating number of new business ventures, lobbying actions, and product announcements. Between 2008 and last year, Google tripled the number of energy issues it lobbied the U.S. Congress about, putting its energy appeals on par with its telecommunications lobbying. Google also released the PowerMeter last year, a free home electricity monitoring, web-based tool that displays information from a smart meter on a consumer portal. It has partnered with a number of utilities to offer this data to their customers.
 
This year, the U.S. Federal Energy Regulatory Commission (FERC) approved Google’s application to become an electricity marketer, which allows the company to buy and sell wholesale electricity like a utility in order to feed its power-hungry datacenters. The move follows the same strategy of other major power users, like grocer Safeway or consumer products maker Kimberly-Clark. But it also gives Google the option to sell or trade power down the road, and recent moves by the Internet behemoth suggest it plans to do just that.
 
But the company isn’t limiting its sights on energy opportunities in the smart grid. Google’s “green energy czar,” Bill Weihl, announced this month that the firm has developed a prototype mirror for solar thermal, concentrating solar power (CSP). Google has already invested $10 million in solar thermal plant developers BrightSource and eSolar. Now it may be moving to supply them – either directly or through licensing – with cheaper mirrors.

That said, claims that Google’s prototype mirrors reduce system cost by half are unquestionably overhyped. For one, mirror costs account for 5% to 15% of a heliostat thermal plant. Plus, Google’s technology is at least three years away from commercialization. So, it’s unlikely the company has outpaced more experienced mirror and glass manufacturers that are quietly pursuing similar technologies. Even so, if its mirror technology proves viable, expect Google to license it out – perhaps under terms that it can receives discounted access to the electricity generated.
 
Google’s collective moves invite further consideration about its energy plans. For now, it’s likely that the company’s primary interest will be leveraging data and computing power for energy trading. Expediting the addition of low-cost renewables to the mix only improves the viability of that market.

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M&A activity brightens among solar thermal developers, as photovoltaic IPOs dim

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Early February saw 2010′s first concentration of M&A activity in the solar market. First, French nuclear power giant Areva acquired Ausra, a linear Fresnel lens solar thermal plant equipment supplier. Ausra struggled in early 2009 as investment in solar thermal installations all but halted (see the February 5, 2009 LRSJ – client registration required), and changed focus from a power plant developer to an equipment provider. The company was rumored to be up for sale since mid-2009. The Areva-Ausra match-up could breathe life into Ausra’s low-cost solar plant technology, and use the experience and reach of Areva’s power plant equipment business to push forward solar thermal installations.

Meanwhile, dish Stirling solar thermal technology developer Infinia raised $11.5 million in an equity financing round. This follows a $50 million capital raise mid-2009, and a $58 million raise in April 2008. Infinia competes directly with Stirling Energy Systems, which received $100 million in financing from NTR in May 2008.

The hoard of cash flowing into solar thermal component developers follows the acquisition of leading parabolic trough technology provider Solel by Siemens for $418 million in October 2009. But two questions remain.

First, who’s next to buy? Large component firms, including energy and defense firms, may see a strong fit between their competencies and the large-scale, highly regulated processes required for solar thermal plant execution. As for targets, we’ll keep our eyes on three firms:

  • Heliostat and power tower developer BrightSource Energy, which continues to execute in plant development
  • Linear Fresnel lens and parabolic trough developer SkyFuel, which offers a lower-cost technology option and potentially lower price tag, and
  • Power tower technology developer eSolar, which recently signed a licensing agreement for a 2 GW facility in China

The second question is tougher to answer. Where is all that solar thermal set to go? While 50 MW plant installations continue in Spain, regulatory issues continue to dog the U.S. market (see also the January 7, 2010 LRSJ – client registration required). Clients should expect large-scale wrangling among new solar thermal owners as they push through complex solar thermal projects and offer the reliability, and balance sheet, needed to get the huge projects off the ground.

All of this stands in sharp contrast to IPO activity among photovoltaic technology firms. In Q4 2009, Trony Solar indefinitely postponed its IPO followed by Daqo, a Chinese polysilicon producer, which filed (see the January 21, 2010 LRSJ – client registration required), then lowered, and then in January postponed its IPO. Then, earlier this month, Jinko Solar – a vertically integrated ingot, wafer, and cell producer, joined the list and withdrew its IPO due to “poor market conditions.”

Even the completed IPO of U.S.-based STR Holdings in Q4 2009 yielded lackluster results after repricing twice in the days ahead (see the November 5, 2009 LRSJ – client registration required).

While the general market slump since the first of the year will put investors off, their greater concern likely lies in the volatility of the subsidy-driven solar market – and with good reason. A fresh storm of price cuts and continued margin pressure is brewing for late 2010.

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